Grit and determination are good, right? You should never give up, right? Well, it’s more complicated than that…
One of the most popular questions I’ve asked and been asked by many people over the past ten years is this: When do you know when to walk away from the business you are building?
The answer is easy: It’s impossible to know for certain when a business isn’t ever going to work.
However, it is possible to know when the business you are building is doing more harm than good to you, your team and the industry that you’re in.
Decisions need to be made at multiple points in the business building journey, not just at the tough parts. In truth, you should be asking yourself from day one if you have enough traction, if the market is big enough to sustain another business, if you can make enough money to live the life you want to live and if you want to be doing this exact thing for the next decade.
If you can’t answer those questions at the start, in the middle or deep into your business life, you should start asking some hard questions right now.
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There are some clear-cut factors that you can use to assess your business and how much potential it has. Some are obvious and others are touchy-feely and only you can know the answer, young Skywalker.
The cold hard facts
The first and most obvious question to ask about your business is if it’s profitable? If it is then you’re already in good shape and, believe it or not, probably ahead of the pack. Profitability is hard to come by.
Traction is not the same as profitability. Traction speaks more to the uptake of your product or idea. Are people using it, talking about it, sharing it and coming back for more? If so, then you might be onto something. You might not be profitable but when you have a product that people love and use and talk about, you can do your best to try to monetise it.
Ask yourself: Do you have traction? Be honest. Ten people using your photo app is not traction. Traction is fast and sustained growth that indicates that people love your product.
Seth Godin suggests that in the early stages of your business you should tell ten people about your idea and if they each tell ten people who then each tell ten people, you’re onto something. If not, walk away and think about the next big thing.
Of course, this is easier said than done and if everyone walked away at the first sign of distress, we’d have no businesses left. But the premise is solid. If no one wants to talk about your business or product, then the chances are they won’t want to buy it.
Love of the game
Do you love what you are doing? Do you feel passionate about the problem you are solving? Is this passion sustained over long periods of bad times? If so, then you’re probably on the right track. If you spend your days thinking about other ideas to build then it’s probably a good idea to go out and build those ideas.
Interest is a great indicator of success and failure. If the founder isn’t interested or in love with the business any longer, she should probably find something else to do and call the time of death.
Is your work your vocation? If you don’t know what the difference is, here’s how I see it: Work is what you do to pay your salary. Vocation is what you do even when it probably won’t pay your salary for a while.
Some people are fortunate enough that their vocation is their work. If you’re starting a business and trying to keep it alive, it’s best that you feel like what you are doing is your vocation.
Related: Silent killers of great businesses and how to avoid them
Balance is less about business and more about life. Ten years ago I would have laughed in the face of anyone who spoke to me about balance. Today I firmly believe that balance makes business sustainable.
Is your job your entire life? Do the people close to you look sad or concerned when you tell them that you have to go back into the office again? If so, maybe there’s a problem.
Yes, if you have found your vocation then you should want to dedicate your life to building this into something real and big and sustainable. However that will not happen overnight, so don’t rush to fit in 18 hours of work in a single day. That’s not sustainable over 20 years.
There is nothing special about sleeping for a couple of hours every day. There’s nothing sexy about an unhealthy business. There’s nothing honourable in sacrificing your personal life for your business.
If you’re looking to open up a business bank account, Standard Bank provides a Business Current Account that is simple to manage and allows you to transact in the way that works best for you.
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